Monday, December 16, 2019

Markets stay cautious regarding US-China phase one trade deal; BoJ, BoE and PBoC monetary policy decisions due this week

Tags
  • China
  • Dollar
  • Yen
  • Euro
  • Stocks
  • DAX
  • Dow Jones

US stocks remained mostly flat on Friday, as investors appeared to remain skeptical of the announced US-China phase one trade deal that is due to be signed in the first week of 2020. US trade officials claimed China has agreed to increase imports of US goods and services by at least US$200bn on top of 2017's figure of US$186bn over the next two years. In return, the US will not go ahead with the scheduled tariffs on December 15th and will roll back some of the earlier tariffs currently in effect.

Indexes_Tariffs

Global equities surged over the past week, thanks to the partial trade deal. Major US indices reached new record highs, while the Hang Seng Index led major Asian indices, spiking upwards 4.49%.

Indexes_Indices

Safe haven assets were mixed on Friday, as investors approached the partial trade agreement with caution. Gold gained as the dollar fell, while the yen dropped slightly against the greenback. US Treasury yields declined across the board.

US Treasury Yields

Sterling spiked on Friday as the Conservative party secured a sweeping victory in the UK General Election. The Tories won 365 out of 650 seats, regaining their majority in parliament, meaning British Prime Minister Boris Johnson will likely be able to pass his Brexit Withdrawal Bill without facing much resistance in the House of Commons.

Major currencies performance against the dollar

Meanwhile, stocks in Asia looked set to retreat on Monday morning thanks to trade deal doubts. The Nikkei and Straits times Index started Monday's trading session 0.26% and 0.01% lower respectively while Hang Seng Index futures lost 0.70% overnight as of Monday 3am (GMT+8).

Asia_Stock

This week's macro events include monetary policy decisions from Japan, the UK and China. Inflation rates will be released from multiple countries, including the US, UK and the EU.